As part of a series of posts focussing on consumer energy consumption reduction in the UK, this post highlights some advice in understanding a domestic consumer energy bill based on advice from Ofgem,  the government regulator for gas and electricity markets in Great Britain

Saving on Domestic Energy Bills by finding a cheaper supplier 

In the UK, the energy regulator Ofgem, has encouraged domestic energy consumers to reduce their annual energy bills by switching to alternative tariffs with their supplier or switching supplier altogether. Tariffs are the prices that Energy Companies change per unit of energy used.

To help the consumer navigate the complex world of energy tariffs, Ofgem regulated that Energy Supply Companies must provide a “Tariff Comparison Rate” for all the energy tariffs that they bring to market.

Tariff Comparison Rate¹

The Tariff Comparison Rate  (TCR) is there to act as a price comparison guide for all energy customers. It breaks down the cost of an energy tariff by combining everything from the unit rates, standing charges, VAT and discounts into one amount and then dividing it by the average annual consumption figures published by Ofgem – the energy regulator.

The idea is to allow all tariffs to be compared against one another, by giving you a single price per kilowatt hour for the energy you use.

This is how it is calculated:- 

• multiple the unit cost by ofgem’s average energy consumption figures 
• Add a year’s standing charge (this is a daily charge and can vary significantly between tariffs)
• Take away any discounts that might be applicable
• Add the VAT
• Finally, divide this figure by Ofgem’s average consumption figures
• This gives you the TCR in pence per kWh (kilowatt hour)

Common Energy Tariffs²

There are two main types of energy tariff – fixed or variable rate. Dual fuel and online options are an opportunity for further cost saving.

• Fixed– this is a tariff with a fixed end date
• Variable– the prices of this tariff aren’t fixed, so your supplier can change them as long as they give you advance notice.
• Duel Fuel– based on a supply of energy for both your gas and electricity from one supplier – sometimes more economical
• Online– specifically operated online, meaning paperless bills etc. so may be slightly cheaper than other tariffs

Does this save energy?

Switching supplier or finding a cheaper tariff will not reduce energy consumption – it will only reduce the amount the consumer pays for their energy. Look out for our next blog which provides some easy ideas on how to save energy within the home.

¹https://www.ovoenergy.com/blog/ovo-news/tariff-comparison-rates.html

²http://www.goenergyshopping.co.uk/energy-tariffs-and-deals/common-tariffs